How and Where to Buy Spot Bitcoin ETFs?

For all of 2024, bitcoin nearly tripled, up almost 130%, the best performing asset class on the planet. This has taken it beyond silver, making it the eighth-largest asset in the world – all-time record.

As Bitcoin is becoming more pronounced within the international monetary market, the Bitcoin Spot ETF serves as a major focal point for traders. However, the Bitcoin Spot ETF is a unique product, one with no parallel to traditional stock ETFs. However, traditional financial instruments are incapable of analysing a bitcoin spot ETF.

SoSoValue launched the Bitcoin Spot ETF Dashboard to not only bridge the gap between traditional financial markets and cryptocurrencies, but also assist in the monitoring of inflows and outflows of Bitcoin Spot ETFs. SoSoValue Bitcoin Spot ETF dashboard for Crypto investors will ease your investment. 

Impact of Bitcoin Spot ETFs on the Market

The US Securities and Exchange Commission (SEC) approved 11 Bitcoin Spot ETF in January 2024. This approval means that Bitcoin Spot ETF officially entered into the U.S. traditional financial market, allowing Bitcoin Spot ETF to be better received as a financial investment asset. 

This boosts Bitcoin’s reputation as an investment vehicle and results in a wider acceptance of Bitcoin from the general public and traditional finance. 

In 2024, the total inflow for Bitcoin Spot ETFs was more than $100 billion as per SoSoValue data, already surpassing the AUM of gold ETFs. It is a testament to the tremendous demand and faith in the Bitcoin ecosystem that, despite gold having a 20-year headstart, Bitcoin has already overtaken it.

The market landscape has quietly evolved while this wave of cryptocurrency innovation took place. 

Bringing in Institutional Investors

• SEC approval provides a regulated access point for institution investors to the Bitcoin market. And a lot of large funds and institutions are getting more interested in the crypto market, but typically they avoid buying Bitcoin directly because of regulatory concern about digital assets. BitCoin Spot ETF will allow investors to invest per Bitcoin in a regulated way as a structured secure manner. 

An Increase in Retail Investor Activity 

• With the new approval of spot Bitcoin ETF, Bitcoin is now more accessible to retail investors. For comparison, buying Bitcoin directly with a private key, investors no longer have to have concerns over who manages its private keys or guarantees its platform security. However, spot ETFs enable retail investors to acquire bitcoin within a familiar stock market environment that can lower the barrier to investing, essentially granting stock market investors a useful tool to acquire the asset.

Advocating for Widespread Adoption of Crypto Assets

• As Bitcoin Spot ETFs finally started to make a real appearance, crypto-assets are slowly beginning to socialize with traditional financial systems. This serves to legitimize Bitcoin and shuffles all crypto into the mainstream. Improved crypto market regulatory framework: Bitcoin Spot ETFs would in turn incentivize more regulatory authorities to approve cryptocurrency asset products which would then continue to bolster the financial infrastructure for the crypto market. 

https://www.youtube.com/watch?v=HRrpuAR9p7s

Advantage of Bitcoin Spot ETF

As we have already stated, since the release of Bitcoin Spot ETFs, they not only opened the door to institutional investors but also attracted more attention from ordinary users. And while it may be true that ordinary investors can purchase and hold Bitcoin directly, they must have sufficient technical knowledge as well as a high level of security awareness, both of which serve to discourage these types of investors. Bitcoin Spot ETFs allow for a much easier and safer means for everyday users to gain an exposure to Bitcoin, lowering the threshold for entry and portfolio diversification. 

Bitcoin Spot ETFs are able to reflect the trend of the Bitcoin market accurately because they trade at the prevailing price of Bitcoin, and so they are more favored by investors. Hence Bitcoin Spot ETFs are the first choice when it comes to retail users wanting to invest in crypto. While there is still a lot of volatility in the market with institutional money and retail investors, both entering the market and the Bitcoin Spot ETFs seem to have some way upward from here to the general mainstream use of Bitcoin and other cryptocurrencies. 

How to Select Bitcoin Spot ETFs

The Bitcoin Spot ETFs currently available are 12 in total. What is the best Bitcoin Spot ETF to invest in? So what should the average user do?

source: blcokworks

Here are some factors that investors can consider when choosing a Bitcoin Spot ETF:

Market Performance

• SoSoValue provides investors with sight of historical and up-to-date performance of things like IBIT ETFs versus the performance of the underlying asset, as well as the market. They can also compare the ETF’s return, volatility and risk-adjusted return to their expectations and goals to see how close they come.

Management Fees

• Lower fees result in lower investment costs for long-term investors. Management fees are generally included in the ETF’s annual fee report. In order to maximize long-term returns, investors should look for and select the most reasonable fees among the same ETFs.

Assets Under Management (AUM)

• The AUM is a measure of an ETF’s popularity and liquidity. Generally, ETFs with higher AUM are easier to trade and are more liquid, making it less likely for a large trade to lead to a price meltdown.

Tracking Error

• Tracking Error: This is the variance between how well an ETF performs and its underlying shot (ex: bitcoin) This could allow ETFs with lower tracking errors to more closely match Bitcoin’s price movements. Investors must examine historical tracking error data of the ETFs, and select ones that closely follow the price movements of bitcoin.

Liquidity

• Liquidity is essentially the ease with which an ETF can be purchased or sold on the market. Higher liquidity ETFs trade faster and have a thinner bid-ask spread. Not to mention, some people are active investors or short term traders, so liquidity is key.

Reputation

• Make sure of the reputation of the ETF provider, authorized participants and custodians. Search for reviews and ratings from other investors, analysts, and experts. Verify the ETF is compliant with regulations and has not had any offside issues or disputes in the past. Investing in an ETF from well-known fund management companies, you can have a little bit of security and transparency, you can have a good idea as to what is being reported.

Investment Strategy

• Different ETFs may follow different investment strategies. Some of them don’t necessarily focus on it, they are short term arbitrage… . Others, long term Bitcoin. Ensure that each ETF you analyze has an investment strategy you understand and that makes sense with your goals.

Long-Term Holders: Seek out low-fee, tax efficient Bitcoin ETFs with good liquidity if you intend to hold Bitcoin in the long term. Similarly, pre-defined key factors such as AUM and tracking error should be considered.

For Short-Term Traders: If you are someone who does short-term trading, then liquidity and trading efficiency matters the most. But also make sure whatever ETF you pick can execute trades fast with little price slippage.

Where to Buy Bitcoin Spot ETFs？

Similar to trading traditional stocks or ETFs, buying Bitcoin Spot ETFs is still possible. Here is what you have to do to invest in Bitcoin ETFs:

Choose a Brokerage Account

• You will need a brokerage account in order to purchase Bitcoin Spot ETFs. Open an account with a traditional brokerage firm or an investment platform. Some common brokerage firms are IBKR, Robinhood, etc.

Choose a Brokerage Platform that Offers Bitcoin ETFs

• Not all brokerage platforms allow Bitcoin Spot ETF trades. Double verify Bitcoin Spot ETF Trading Is Available On Your Chosen Platform. Ultimately, thousands of BTC Spot ETF are backed by large platforms, such as Fidelity and TD Ameritrade.

Open an account and Verify Your Identity

After choosing a brokerage platform, open an investment account. The process usually consists of：

• Inputting personal information (name, address, date of birth, etc.)

• The financial information (including sources of income, assets, liabilities etc.)

• Finishing up identity verification (they might request some ID documents)

Fund Your Brokerage Account

If you have not already deposited funds into your brokerage account, do so before purchasing into an ETF. Most platforms have different deposit methods, i.e.:

• Bank transfers

• Credit/debit cards

• Online transaction processors (e.g., PayPal, Zelle, etc.)

Look for Bitcoin Spot ETF You Want

• When your funds have been deposited, you can search for the Bitcoin Spot ETF you would like to buy through the brokerage platform’s trading interface. Either type in the name of the ETF or its ticker symbol (for example, IBIT or FBTC). The ETF you select and place an order based on order types.

• You can hold the ETF long-term and wait for Bitcoin’s price to go up, or you can adjust your position based on the market.

Conclusion

Bitcoin Spot ETFs offer a simple means for investors to access Bitcoin without the technical and security risks associated with direct Bitcoin ownership. In selecting an ETF, consider factors like management fees, AUM, liquidity, and other investment attributes to determine which to select for investment that aligns with your investment goals and risk appetite.

Bitcoin Spot ETFs also play a key role for investors as they have become one of the most widely used tools for investing in Bitcoin itself (one of the fastest growing market caps and capital inflows). Due to Bitcoin`s price variability, Bitcoin Spot ETFs performance has experienced noticeable shifts. Now, on the road ahead, as regulations improve and institutional investors have begun to start pouring into space, Bitcoin Spot ETFs will continue to grow and become a major player in cryptocurrency investments.